In what could be the first of its kind, several of the city’s largest residential brokerages will go dark today as thousands of agents are expected to converge on City Hall to protest a cap on rental commissions.
Douglas Elliman, Bond New York and Bohemia Realty each will close their offices for several hours around midday. That’s when the City Council has scheduled a hearing on the bill, which brokers say threatens their livelihoods and unfairly regulates their business.
Steven James, president of Elliman’s New York division
“We feel strongly that we need to go and have our voices heard,” said Steven James, president of Elliman’s New York division, who said his firm plans to shutter its offices between 10 a.m. and 2 p.m. “Inevitably at some point in everyone’s career, you’re doing rentals.”
Intro 1423 was put forward in February and initially proposed capping the amount a rental agent’s commission to one month’s rent. In the fierce backlash that ensued, three sponsors withdrew their support. The Real Estate Board of New York said the initial version of the bill threatened to “put residential agents out of business.”
In May, the bill’s prime sponsor, Council member Keith Powers, amended the bill to cap commission payments for agents who represent landlords.
During a conference call with members on Wednesday, REBNY officials urged agents to speak up at the hearing to convey to lawmakers that their livelihoods — and affordable housing — is at stake.
“Clearly this legislation is still an overreach and it’s only the first step to other commissions potentially being regulated by the City Council,” said Reggie Thomas, REBNY’s senior vice president of government affairs.
Doug Wagner, director of brokerage services at Bond, said Intro 1423 may be well-intentioned — Powers has said a goal is to help save consumers money — but limiting competition is “completely inappropriate.”
“We want [Council members] to meet the rank-and-file agents,” he said. “I think it’s important that members of the City Council recognize who they are affecting.”
It’s unclear how much of an economic impact the proposed cap on commissions would have on the industry at large, but New York is still a city made up predominantly of renters.
James estimated that 10 percent to 15 percent of Elliman’s revenue comes from rentals — a segment of the market that’s been struggling amid competition from aggregators. Since 2017, StreetEasy has charged agents a daily fee to post rental listings online, he noted.
Historically, the standard commission a rental agent could collect was 15 percent of a year’s rent, but James said over the past few years that’s dwindled to 10 percent or lower. Nowadays, he added, “You’re lucky if it’s one month’s rent that you split on a co-broke deal.”